MARKET DEVELOPMENT
VEGOILS-Palm hits record high on growing Russia-Ukraine tensions
VEGOILS-Palm hits record high on growing Russia-Ukraine tensions
22.02.2022 (www.nasdaq.com) - By Mei Mei Chu
KUALA LUMPUR, Feb 22 (Reuters) - Malaysian palm oil futures extended gains for a fourth straight session on Tuesday to hit an all-time high, as escalating Russia-Ukraine tensions threaten to hurt supply of vegetable oils, grains and crude in the Black Sea region.
The benchmark palm oil contract FCPOc3 for May delivery on the Bursa Malaysia Derivatives Exchange rose 85 ringgit, or 1.5%, to 5,760 ringgit ($1,377.00) a tonne by the midday break.
The spot contract hit a record high of 6,290 ringgit as investors also priced in tightening supply following an upsurge in early February exports.
Exports of Malaysian palm oil products for Feb. 1-20 rose 30.5% from the same period in January, cargo surveyor Societe Generale de Surveillance said.
Developments at the Ukraine border and good exports continue to bring short covering in palm oil contract despite higher production estimates, a Kuala Lumpur-based trader said.
The Southern Peninsula Palm Oil Millers' Association on Monday estimated production during Feb. 1-20 rose 11% from the month before, according to traders.
Crude oil prices jumped more than $2 on supply disruption worries after Moscow ordered troops into two breakaway regions in eastern Ukraine, making palm a more attractive option for biodiesel feedstock. O/R
Tensions between the two countries have also stoked concerns over sunflower oil shipments from the Black Sea region, Refinitiv Agriculture Research said in a note on Monday.
In other oils, Dalian's most-active soyoil contract DBYcv1 rose 1.4%, while its palm oil contract DCPcv1 jumped 2.6%. Soyoil prices on the Chicago Board of Trade BOcv1 were up 1.5%.
Palm oil may test a resistance zone of 5,794-5,868 ringgit per tonne, a break above which could lead to a gain to 5,986 ringgit, Reuters technical analyst Wang Tao said. TECH/C
($1 = 4.1830 ringgit)
(Reporting by Mei Mei Chu; Editing by Subhranshu Sahu and Shounak Dasgupta)((Meifong.chu@thomsonreuters.com))